Throughout our studies in Economics we have learnt that the price of a good will have an effect on the quantity demanded upon that good. Season Ticket sales should fluctuate as clubs get they’re prices either right or wrong. If the price of a Charlton Season Ticket fell then the demand for it would go up, however if the price of a Season Ticket increased then the demand for it would fall.
If Charlton lowered the price of there Season Tickets then they would expect to see a higher quantity of season tickets demanded, this is shown with the movement from a to b. This is called an extension of demand.
If Charlton increased the price of there Season Tickets then they would expect to see lower quantity of season tickets demanded, this is shown with the movement from b to a. This is called a contraction of demand. This movement can be explained, it is very possible that the buyers of the season tickets are hard-core Charlton fans, however when the movement from q2 to q1 are possibly the Charlton fans that are not too serious about watching there club play football week in week out. There is even the possibility that they are not Charlton fans but football fans in general and were coming to Charlton as it was cheap, compared to the likes of Chelsea who ask £1000 for a junior Season Ticket and £1500 for an adult. Whereas Charlton ask £150 for a junior and £480 for an adult.
Match-Day Tickets
Not so serious Charlton fans would probably prefer to buy a Ticket for the match they want to see, so the demand curve may be different. I think people would be more willing to purchase a match-day ticket at a higher price as they only want to see that game, however once again there is a point where they will refuse to buy a ticket at that price.
From the diagram we can see that if there is a change in the price for a ticket, that there will be very little supporters, any people who do buy tickets then decide not to will be able to be replaced as supply of supporters wanting tickets is still high
How Football Fans (not charlton fans) Generate Extra Profits
If some football fans just want to watch premiership football they are a lot more likely to go and watch Charlton rather than Chelsea as they will still see the same clubs play but at well over ½ the price. This is when Charlton would expect to receive a greater demand for tickets and they can also generate some more profit by selling otherwise unoccupied seats to such supporters.
How a Persons Income Effects the Demand of Tickets
A ticket at Charlton Athletic can be said to be a ‘Normal Good’ as, if a persons income went up then the demand for tickets would rise as they are more likely to buy more of them, however if that same persons income fell then the demand for tickets would be more likely to fall as they cannot afford to buy as many as they previously could.
Advertising
Advertising is one way that can generate extra profits to a club like Charlton. Advertising makes a once unnoticed club now noticeable. Advertising is everywhere around us and plays an important role in the success of many big companies like Virgin and Nike aswell as Charlton Athletic. Advertising can be seen on TV and Billboards on your local streets, it can be heard on the radio and can even be read in newspapers and magazines. However, in order to have a successful advertising campaign you need to make sure your advertisement is eye-catching or it will go unnoticed, meaning that you have just wasted a lot of money. The new John Smith’s advert is an extremely good example of good advertising. Comprising of three extremely skilful players and then your local beer bellied football crazy mate from down the pub. It shows of talent and then the ‘geezer’ kicks the ball miles and quotes ‘ave it’, this I know has become a popular saying amongst my mates, and I find this advert humorous and eye-catching. It has also achieved the desired objective in generating more sales of John Smith’s.
Charlton have advertised on a much smaller scale on local radio stations and in local newspapers. However there advertisement campaigns have been successful and they to have managed to achieve what they initially set out to do. They now fill a 26,650 capacity all seater stadium most weeks whilst consistently achieve crowds of well over 25,000. They have been able to raise the capacity from 19,000 to 26,650 and fill it just through advertising and this is an extremely hard task for a small club like Charlton, whereas at the likes of Chelsea, Arsenal and Manchester United there are waiting lists aslong as 5 years in progress. The diagram below shows how successful advertising effects the demand for tickets at a club.
The demand curve has shifted right and this shows that the club has had a successful advertising campaign that has led to an increase in demand for tickets.
Elasticity
Elasticity measures the responsiveness to a quantity demanded when the price changes.
Elasticity = % change in the quantity demanded
% change in price
The elasticity of Charlton can be said to be both elastic and inelastic, depending upon the given situation. The elasticity of Charlton can be said to be elastic as if the consumer was not a serious Charlton fan and the price of the tickets were to raise then that person would buy less tickets.
From the diagram we can see that the % change in price has to lead to a much bigger and possibly unexpected % change in the quantity demanded. This can be disastrous for a smaller club like Charlton, simply because they do not have the same support as the likes of Arsenal and Chelsea who can afford to charge astronomical prices, as they know that people will still watch them.
Tickets can also be said to be inelastic as, if the ticket buyer was a hard-core avid football fan then the price of a ticket would not matter and they would still pay higher prices to watch their team. Also if demand for tickets is high then it could be said that the tickets would be inelastic, like Chelsea and Arsenal.
Team Performances
Ticket sales can also depend upon how well the team performed in the previous fixture or their overall performance over the past couple of games. If Charlton are having a bad run then the amount of match day tickets sold will fall as people are no longer willing to pay to see their team lose game after game. However if Charlton were to have one bad game then the amount of tickets sold would fall very slightly. If Charlton are on a good run, then demand for a ticket will rise, however if they are on a bad run, then the demand for a ticket will fall. The diagrams below explain this.
These diagrams show the effects of Charlton’s recent team performances and how the effect the demand for a ticket
Income at Charlton Athletic
Above is a pie chart to show the distribution of income that Charlton Athletic receives and how it is generated. We can see how the income Charlton receive is distributed. We can see that most of Charlton's money received is via Season Ticket sales and sales of merchandise, this is obviously because people want to watch football so will pay the prices to see Charlton play each week. Merchandise is always brought as it shows pride in your team and your not ashamed to show it, its all part of football and having the latest shirt fits in nicely. It was not surprising to see that Match-day tickets generated 11% of the total revenue into Charlton Athletic as these tickets are brought for certain games for people who only want to see that game or for someone whose income is too low to afford a Season Ticket.
Programmes also generated 4% of the total revenue into Charlton and I was not surprised at this either due to the fact that many people often buy a programme to read and see the team.
I was very surprised to see transport generating 1% of Charlton’s total revenue as it was not something I was totally aware of, I have discovered that Charlton run buses and trains to not only away games but also to home games aswell.
Survey to Show how Much Fans are willing to pay to see Charlton Athletic FC play football
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For my survey I stood outside of the turnstile that I enter the ground at and recorded 50 pieces of data at random. I did not show anyone the categories and just let them say how much they would be willing to pay to see Charlton play football. I was not surprised at the results I obtained and full expected that feedback form my fellow supporters. The results I obtained show that the lower the price the quantity demanded will rise, however due to me not showing the public what categories there were to make it fairer. I found that nobody’s maximum price that they would be willing to pay for a Charlton ticket would be £5 and the mean was £15. We can see that the lower the price the greater the demand is true because nobody was willing to pay £50 or £40 with only two people willing to pay £30. The supply curve has shifted to the right suggesting that at a lower price more tickets will be brought as more supporters will be willing to pay lower prices so we see a movement from q to q1.
Cross Elasticity of Demand
Cross elasticity of demand is found by dividing a percentage change in the demand for a good by the percentage change in price of a different good. However it only works if the person buying the tickets is a fan of neither club. It should determine what club is more likely to attract neutrals to come and watch. It can be used to determine whether a substitute such as Millwall would have a greater demand for tickets.
Cross Elasticity of Demand = % change in the demand for a good
% change in the price of a different good
Millwall could be considered as a substitute to Charlton from a neutrals point of view however this could be unfair as the two clubs are in different leagues to one another, so although the cross elasticity of demand for a Millwall ticket will come out lower than Charlton’s there are other decisive factors.
I will show cross elasticity of demand by using Tottenham Hotspur, they are both in london and are not title challenging and have world-class players.
If the cross elasticity of demand for Charlton was 3 and the price of a Tottenham ticket rose by 5% then there would be a 15% increase in demand for a Charlton ticket, therefore Charlton would attract 15% more fans to the Valley and generate more income from fans who might have been elsewhere had Charlton not offered lower ticket prices than Tottenham.
